Our methods are not quantitative or fashionable
Our investment techniques focus on default risk and the cash flows that support investment value. We spend a lot of time examining issuers and assessing their creditworthiness. Our long collective experience in credit analysis contributes to our ability to avoid overpriced and risky issuers and identify securities that are undervalued given their credit risk and potential return. We tend to exploit illiquidity, buying when fear is prevalent and selling into enthusiasm. We do not avoid risk but rather we ensure that credit risk is priced appropriately and that our client portfolios are compensated for the risks they assume.
Maximum Loss Analysis
Our contrary nature is tempered by our risk management discipline. Many years of investing in distressed debt has given us a substantial insight into the value of issuers after default. We have incorporated this into our research and look at the loss potential of each issuer prior to investment. We call this our Maximum Loss Analysis and this is used as an input in determining the size of each position based on its potential impact on return. Demand and supply pressures often move the market prices of securities to valuation extremes. We believe that this creates opportunity for our disciplined and value oriented approach to investing.